Why Nigeria’s Refineries Failed: NNPC CEO Blames Focus on Contracts Over Operations
Nigeria’s state-owned refineries have struggled for decades because successive managers prioritized financing and engineering contracts over the actual running of the plants, according to Bayo Ojulari, CEO of the Nigerian National Petroleum Company Limited (NNPC). Speaking at the Nigerian International Energy Summit, Ojulari said the system rewarded deal-making and short-term gains rather than long-term operational efficiency.
Ojulari explained that the country’s approach focused heavily on financing and engineering, procurement, and construction (EPC) contracts. “Anybody who finances a project expects margins and profitability. EPC contractors do their work, get paid, and move on,” he said, adding that NNPC was left to operate the refineries for decades without building the necessary expertise to manage them effectively.
He also highlighted that operations and maintenance (O&M) contracts, often touted as solutions, only added another layer of outsourcing. “O&M becomes another contract. So you end up with financing, EPC, O&M — all of them taking money from the system without any skin in the game,” Ojulari said. “There’s no way to sustain a business like that. The system was designed for taking, not for putting anything back.”
Ojulari stressed that the new NNPC leadership is now shifting focus to operational readiness from the very start of refinery projects. Drawing from his international experience with companies like Shell and Qatargas, he said successful oil projects embed operations thinking from day one. Auditing operational readiness early in the process, he explained, helps identify risks and ensures refineries can run efficiently for decades, not just during construction.
Looking ahead, Ojulari revealed that NNPC is exploring a partnership with a Chinese firm for one of the state-owned refineries. The initiative aims to create a more sustainable operating model, moving away from short-term contract-focused approaches toward long-term performance and efficiency.
source: Business day